Tax

Australia's tax rates near world highs

Saturday, the 20th of November 2004.

An international conference on taxation heard that Australians have the third highest rate of personal taxation in the world.
A report presented by accounting firm KPMG has shown that as a proportion of Gross Domestic Product (GDP), Australia's personal income tax take sits behind New Zealand and Canada.
However, it is ahead of other countries and is higher than the Organisation for Economic Cooperation and Development (OECD) average.
The report also finds that Australia's top marginal tax rate - 48.5 per cent - is the second highest in the world behind Japan.
The research has been presented to the World Taxpayers conference, which is being held on Queensland's Gold Coast.

ABC 20-11-4

http://www.abc.net.au/news/newsitems/200411/s1247881.htm

We get peel, banana-benders get the fruit

24th of March 2004

Don't try telling me we hate paying tax. Certainly, the people of NSW and Victoria love paying it, particularly the GST. Find that hard to believe? Well, consider the facts.

The federal politicians run a scheme where they take what these days amounts to $4.4 billion a year of the GST paid by people in the two big states and rather than sending it back to us as government services they distribute it around the rest of Australia.

.......

Because, surprising as it may sound to people who love paying the GST as much as we do, the people in the rest of Australia quite like the idea of having us effectively paying their taxes for them.

And if we ever woke up and told our federal politicians it had gone beyond a joke, they would not be popular chappies in places like Queensland - the state least deserving of our charity.

While we're talking tax, you should know that, as state oppositions are always pointing out, the doubtful honour of being the government with the highest level of state taxes per person passes continually between NSW and Victoria. Why do the citizens of the two big states pay more state tax? Because the feds' generosity to the small fry means our governments get proportionately less revenue back from the Commonwealth.

The way this remarkable arrangement works is that everyone in Australia pays the 10 per cent GST to the Federal Government, every cent of which it then pays to the six state (and two territory) governments.

But the feds don't just return to each state the GST money their own citizens paid. No, the money is shared between the states according to the split-up recommended by a crowd called the Commonwealth Grants Commission.

In theory, the grants commission recommends the split-up it believes will give each state the same capacity to provide government services. It makes allowance for those states that have a below-average capacity to raise their own revenue, as well as those that have to spend more to provide the same standard of services as other states provide. This attempt to narrow the gap between the richest and poorest states is called "horizontal fiscal equalisation" and it involves the most mind-numbingly arcane calculations on the part of the grants commission.

It's just redone its calculations in a way that makes NSW an even bigger loser. Its share is to be cut by a further $376 million a year. Fortunately, Victoria's will be cut only by a further $43 million.

Surprisingly, the shares of South Australia, Tasmania, the ACT and the Northern Territory are also cut. So the big winners from the review are Western Australia, gaining $235 million and - you guessed it - Queensland, gaining an extra $273 million.

When you compare Australia with other federations - such as the United States, Canada and Germany - you find a strange thing. Though we're the country with the smallest disparity between states, we're the one that goes to the greatest lengths to try to eliminate it. In the US they simply don't bother.

Now, I suspect that one reason the citizens of NSW and Victoria don't get more excited about this huge Robin Hood exercise is their belief that the money does go from the rich to the poor, and that it's a good thing for struggling states such as South Australia and Tasmania to get a bit of help.

When you delve into exactly how the money's divvied up, however, you discover the process isn't as logical and scrupulously fair as all the intricate calculations would lead you to expect.

Consider this. It's estimated that, in the coming financial year, the taxpayers of NSW will get back $2.9 billion less than the GST they pay. Victorians will get back $1.5 billion less, creating a pot for distribution to the other states of $4.4 billion.

Only 11 per cent of that pot will go to WA. Tasmania gets 15 per cent and SA gets 16 per cent.

The ACT gets too little to speak of. But Queensland gets 27 per cent and the NT 31 per cent.

I suppose you can understand why a place like the Territory deserves a subsidy of $1.4 billion a year from NSW and Victoria, but how on earth can you justify giving $1.2 billion to poor, struggling, benighted Queensland?

Supposedly, the banana-benders are slipping back into penury so quickly that in the coming year they'll be getting almost 50 per cent more cash than they got this year. That's $780 million from NSW - equivalent to $114 from every person in the state.

If that doesn't make you think there's something skew-whiff about the grants commission's fancy calculations, I don't know what will. But the more you delve, the more of a loaded game you see it is.

NSW gets penalised because its high property prices mean it can rake in a bundle from stamp duty on conveyances and land tax. But the commission has been most reluctant to recognise that the higher cost of living in Sydney gives our State Government bigger wage bills for police, nurses and teachers.

And when finally the commission did add that factor to its calculations, it took one look at what it would do to the bottom line and just arbitrarily chopped it back.

The point is that however much the world changes, the grants commission goes on making sure it transfers bags of our money to the smaller states. It will go on doing this - and, in the process, giving Queensland far more than it deserves - until the Federal Government instructs it to be more reasonable. But the federal pollies won't touch a thing until enough taxpayers from NSW and Victoria tell them the game is up.

This story was found at: http://www.smh.com.au/articles/2004/03/23/1079939645310.html

SMH 24-3-4

 

The surplus

The 2nd of October 2003

The surplus? I am more concerned with why the feral government has a surplus rather than what to do with it.

I was taught that the feral government did not have the power to levy income tax ( it was a state power ) until World War Two. I believe that the Emergency Powers (Defence) Act 1939 gave them that power. But they failed to pass the power back to the states when the war ended.

The feral government does not have any health or education powers. Have a look at Part V section 51 of our constitution. http://www.dpmc.gov.au/docs/constitution.cfm

So why does the feral government have departments of health and education? They deliver no services, the states deliver those. As far as I can see these departments largely exist to pass money on to the states. Oh and of course bribe the states into doing what they want. In other words they are non productive bureaucracies that we are paying for. Medicare, you say? No, that's being ripped apart.

Why doesn't the money just go automatically to the states? The level of government that actually delivers these service? My guess is it's just so the feral government can have more control.

The feral government should either return the right to levy income tax to the states. Or automatically pass the vast majority of those funds straight onto the states that those funds were raised in, without any strings. Then the states can get on with their jobs instead of having to bargain for the return of money that was ripped off from the people of their state.

It's about time the feds realized that Australia is a federation of sovereign states, not a confederation!


Tax grab: the $19bn sting

By Josh Gordon

Economics Correspondent Canberra

15th of September 2003

Australians paid about $19 billion more tax last financial year, with the national tax harvest now growing at almost double the rate of incomes.

An analysis of the latest economic growth figures by The Age has revealed that the total tax take shot up by almost 9 per cent in 2002-03, while income earned by individuals and companies grew by about 5.5 per cent.

Revenue is soaring from almost every source, including income tax, payroll tax, company tax, the GST, financial taxes, land taxes, council rates, stamp duty, fuel taxes, car taxes and travel taxes.

The surge in collections was fuelled in part by rising employment, strong profits and Australia's record housing boom and consumer spending binge, with more than $235 billion pumped into federal, state and local government coffers last financial year.

But the revenue boom is also being fed by the effects of bracket creep, where nominal wage increases push people into higher income tax brackets, and inflating property prices result in stamp duty being charged at higher rates. Treasurer Peter Costello last night defended the Federal Government's record, highlighting the July 1 tax cuts that delivered an average income tax cut of $4 a week to individuals.

At the same time, Mr Costello said the states were boosting taxes and charges, and reaping a stamp duty windfall from home buyers. "The Commonwealth is cutting taxes," Mr Costello said. "None of the states are cutting taxes, in fact, all of the states are increasing them."

But a spokesman for shadow treasurer Mark Latham said: "These figures show that Australian families are under pressure because Peter Costello is the highest taxing treasurer in Australian history, and all the Howard Government can do is to blame the states."

The biggest single contributor to the revenue surge was personal income tax, with PAYE employees, contractors and the self-employed collectively handing over a record $91 billion - a jump of $7.2 billion, or 8.6 per cent, on the previous year.

The income tax burden has been rising much faster than people's earnings, with household income up by just 3.5 per cent in the last financial year. According to the figures, taxes accounted for an estimated 31 per cent of the total economy in 2002-03, compared to 30 per cent in 2001-02.

The figures suggest that a recent crackdown by the Tax Office on the black economy and tougher GST enforcement may be having an impact, with taxes on contractors and the self-employed shooting up by 12 per cent to $17.6 billion. Company tax also jumped by 16 per cent to $37.5 billion.

Certified Practising Accountants senior tax counsel Paul Drum said strong profits, the housing boom and more jobs had bolstered the tax take, but the figures also suggested the Tax Office was successfully clawing back billions of dollars previously lost to tax avoidance. "More income is hitting the books," Mr Drum said. "People are more hesitant to accidentally omit certain amounts from their income and there is a big scare factor."

Big spending by consumers also helped deliver more than $31 billion in revenue from the GST - an 8 per cent increase over the previous year, measured in current prices.

Australia's housing boom has earned governments billions, with land taxes up 9.5 per cent to $2.5 billion and council rates up 8.5 per cent to $7.4 billion. The Federal Government has accused the states of exacerbating the housing affordability crisis by failing to return the stamp duty windfall, but the Opposition and the states say the Howard Government is culpable because it charges GST on new housing.

Taxes on house and land packages have risen almost 20 per cent a year in the past decade, far exceeding general price inflation of 2.6 per cent a year, according to the Housing Industry Association.

This story was found at:

http://www.theage.com.au/articles/2003/09/14/1063478066600.html

The Age 15-9-3

Price rises swallow next week's tax cut

By Helen Signy

28th of June 2003

The much-heralded $4 income tax cut announced by the Treasurer, Peter Costello, takes effect with the start of the new financial year on Tuesday, but price rises across the board will mean it provides little relief in the cost of living.

The income tax cuts of between $208 and $573 a year across all incomes, announced in the May budget, could become worthless during the new financial year under bracket creep - inflation pushing income earners into a higher tax bracket.

People will have to pay more for utilities, road use and parking from July 1. That date is also the GST's third birthday. This year alone it has netted more than $31 billion for the Federal Government, while stamp duty from Sydney's soaring property market has brought a record $3.55 billion windfall to NSW. "There is certainly not much relief for the residents of NSW or anyone else for that matter," said Peter McDonald, the national director of Taxpayers Australia.

The pressure that has been building on small businesses since the introduction of the GST is set to worsen after July 1, with legislation coming into effect requiring employers to pay compulsory superannuation contributions quarterly rather than annually, and report them in writing to their employees.

Peter Polgar, a Brookvale accountant and tax agent, said the compliance process for small business owners to keep up with GST, employee and company tax, fringe benefit tax and now superannuation was "diabolical".

"It's just penalty, penalty, penalty in an environment that's so complex people are struggling just to meet the requirements," he said. Yet the Association of Superannuation Funds of Australia believes the Government has not gone far enough in changing superannuation laws.

The introduction of government co-contribution payments for low income earners and a reduction in the superannuation surcharge, which the association was hoping would come into effect on Tuesday, have both stalled in the Senate.

On a happier note, July 1 will see an end to the Ansett air ticket levy, which has been adding $10 to the cost of a return ticket and costing passengers $13 million a month. Qantas and Virgin Blue will pass the tax reduction on to their passengers.

The start of the new financial year will also see more transparency in home loan advertising.

Changes to the uniform consumer credit code will require mortgage providers and banks to print a comparison rate in their home loan advertising. By taking into account the advertised rate, upfront fees and continuing charges, they will in theory provide the true cost of the loan.

There is good news for nurses, too, who will receive the next component of their promised wage increase from Tuesday.

But perhaps the most unusual marker of the end of another financial year will be a "smokers' wake" to be held at the Shelbourne Hotel in the city on Monday night. The next day smoking in pubs and clubs will be banned from all service areas, including the counter bar.

However, penalties will not be enforceable until legislation is passed in another six months. The Shelbourne's manager, Justin Carroll, said the new law was "a terrible one to enforce".

This story was found at:

http://www.smh.com.au/articles/2003/06/27/1056683910412.html

SMH 28-6-3

 

Friday 9-5-3

 

Total Tax revenue:

 

99/00   c$196,148,000,000.00

00/01   c$213,766,000,000.00

 

Tax per capita:

 

98/99   c$9,532.00

99/00   c$10,239.00

00/01   c$11,026.00

 

 

The Feral Government’s revenue from income tax:

 

98/99   c$75,580,000,000.00

99/00   c$83,623,000,000.00

Introduction of GST

00/01   c$77,392,000,000.00

01/02

02/03   c$92,200,000,000.00 (est. )

 

In June 2001 there were c9,232,000 Australians employed ( 72% of them full time ). The average hours worked per week c35. Average weekly income c$860.50.

 

So the average income tax paid 00/01 was c$8,383.00

 

In June 2001 there were c19,485,300 Australians. The total tax revenue was c$213,766,000,000.00. The revenue from income tax was 00/01   c$77,392,000,000.00. So the non income tax revenue was c$136,374,000,000.00 or c$6,999.00 per Australian.

 

Figures quoted here are from the ABS. http://www.abs.gov.au/

 

A spreadsheet comparison.

 

Tuesday 6-5-3

 

Do you think you are paying too much tax? Maybe you are, here is a comparison of the top marginal income tax rate:

 

Australia                       48.5%

UK                              40%

New Zealand                39%

USA                            38.6%

Canada                        29%

Singapore                     26%

Hong Kong                  17%

 

Feral Government revenue from income tax is increasing. They have raised over $8,000,000,000.00 extra in income tax since 2000 ( compared to the amount raised in 2000 ).

 

Figures quoted here are from Taxpayers’ Australia. http://taxpayer.com.au/

 

I just wish that they would use this money for our benefit. Think about when you grew up. When I think back, I get the definite impression that there were more hospital beds, more police and better affordable access to school education than there is now.

 

So, where is all the money going?